[UPDATED] Bitcoin vs Gold vs The US Stock Market(US500)

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Quote from: LUCKMCFLY on October 06, 2020, 01:13:15 PM

I think that the correlation between gold and bitcoin is only in the short term, gold has had a slight recovery, it is good, since Donald Trump fell ill with Covid-19 and his wife, they all believed that the price of the markets was going to end very low, in fact the problem of Bitmex regarding the accusation of fraud for some affected that they believed that the price was going to fall, apparently it may be that most people are beginning to understand the great potential that the market has of Bitcoin, we may now see a market rally to around $ 11k or higher.

As you can see from the charts, the strongest correlation between bitcoin and the stock market. Gold walks with them, but sometimes it comes off completely and goes in the opposite direction. I wonder under what conditions bitcoin will become more independent and behave like gold and have the greatest correlation with it?

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Quote from: atjiat on October 16, 2020, 08:26:42 AM

If the Peaceful state of affairs in the world begins to collapse, then the stock market will not resist. The main value will be bitcoin, gold, and also silver. And given the recent news from China, it is highly likely that a major war cannot be avoided. China's next Five-Year Plan aims to increase military power and keep troops on full alert. I believe that such steps are not taken in vain. And when people understand this, then cash will no longer have any value, including the dollar and the yuan.

A major war does not equate to a world war. Humans are hard-headed and could hardly learn a lesson but I think the world is not about to confront another world war. And if a war should come, I think the best form of money would be cash.

A war at this state of our technology means complete destruction. It does not only mean killing the other army or the enemies alone. It is gonna have a collateral damage that is far worse than the intended damage. We are at the nuclear age after all. That means the internet, the electricity, and things which are needed in relation to the use of cryptocurrency would be highly affected.

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If the Peaceful state of affairs in the world begins to collapse, then the stock market will not resist. The main value will be bitcoin, gold, and also silver. And given the recent news from China, it is highly likely that a major war cannot be avoided. China's next Five-Year Plan aims to increase military power and keep troops on full alert. I believe that such steps are not taken in vain. And when people understand this, then cash will no longer have any value, including the dollar and the yuan.

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Quote from: cryptoperkele on October 09, 2020, 04:38:46 PM

Well that's a good point, i was thinking that they could run out of cash fast while trying not to get margin called, and they could look to sell something that isn't as important to them.

Well yea I'd assume this is why Square only allocated a really really small amount(in contrast to their total mcap), so they wouldn't be forced to liquidate the bitcoin if the day comes that they'd need the extra cash. MicroStrategy on the other hand though, they definitely took a risky bet.

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Quote from: mk4 on October 09, 2020, 01:10:19 AM

Nope.

Most investors hold cash to have money ready to buy price crashes. It would make zero sense for them to hold bitcoin for this specific reason due to the simple fact that bitcoin has been mirroring the stock market for a while now, as proved by the chart on the main post.

Well that's a good point, i was thinking that they could run out of cash fast while trying not to get margin called, and they could look to sell something that isn't as important to them.

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Quote from: el kaka22 on October 07, 2020, 12:43:01 PM

For this example we can use pandemic and trump, pandemic made stocks go down but it also made bitcoin go down, pandemic was global and it hurt everyone so it is obviously easy to understand why both got affected, but trump is american president, that has got nothing to do with bitcoin.

I believe that the cause was pandemic, at that moment in March so they both went down for the same reason but they didn't went down because it was something we couldn't handle in both of them and not because one went down. I agree that there is a correlation, but I also disagree they are connected all together.

I just think that there are times when they go down together, there are times when they go up together and there are times when one goes up the other goes down. This means we do not know what will happen beforehand and that is why we can't predict the movements of one of them by looking at the other one. Finally if they are not connected but correlated, that means it doesn't matter to us at all because if we can't use that information, what is it good for?

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Quote from: el kaka22 on October 07, 2020, 12:43:01 PM

^ I doubt that connection between us market and bitcoin is that simple. I understand that there are times when us stock market goes down and so does bitcoin as well and so that is why many people think it is normal for bitcoin to go down when stocks are down but that is not the connection at all.

The connection between them is that sometimes there are reasons why stock markets go down and that same reason could cause bitcoin to go down, in that instance bitcoin is not going down because stocks went down they are both going down for the same reason.

I'm not saying correlation = causation. I'm not saying stocks dropping is the cause of BTC dropping when I point out the two asset classes are correlated.

I could speculate about causes. Maybe investors broadly view both stocks and BTC in terms of risk-on/risk-off cycles, so they naturally move together sometimes even though they are unrelated. Maybe BTC traders observed the correlation and began front running it, setting up bots to follow the stock market. Who knows? The cause doesn't really matter. It's more important to recognize the two markets are correlated. If one is trending strongly up, be careful trading short on the other. Etc.

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Quote from: cryptoperkele on October 08, 2020, 12:58:52 AM

One reason might be that some larger whales who own stocks, own quite a bit bitcoin as well for speculative reasons. This amount is nothing compared to their stock portfolio but is a still huge amount of bitcoins. When prices crash in stock market, they need dollars to protect their long positions in securities and sell their bitcoin in order to do so.

Nope.

Most investors hold cash to have money ready to buy price crashes. It would make zero sense for them to hold bitcoin for this specific reason due to the simple fact that bitcoin has been mirroring the stock market for a while now, as proved by the chart on the main post.

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Quote from: el kaka22 on October 06, 2020, 12:48:11 AM

I am pretty sure the reason why we weren't really affected all that much was the fact that nothing that should be affecting bitcoin ever happened. I understand that trump is sick but why do people think that it should be affecting bitcoin as well? Not like Satoshi is sick? It is not like Vitalik is sick? It is trump and trump has nothing to do with bitcoin at all.

So, why do people think bitcoin should have gone down?
---cut---

One reason might be that some larger whales who own stocks, own quite a bit bitcoin as well for speculative reasons. This amount is nothing compared to their stock portfolio but is a still huge amount of bitcoins. When prices crash in stock market, they need dollars to protect their long positions in securities and sell their bitcoin in order to do so.

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Quote from: el kaka22 on October 07, 2020, 12:43:01 PM

^ I doubt that connection between us market and bitcoin is that simple. I understand that there are times when us stock market goes down and so does bitcoin as well and so that is why many people think it is normal for bitcoin to go down when stocks are down but that is not the connection at all.

"There are times". Except that their price movements are pretty much mirrored, and this has been the case for months already; except that bitcoin's movements are just slightly exaggerated at times. Bitcoin and the stock market's correlation isn't even a subjective thing, it's a mere fact.

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^ I doubt that connection between us market and bitcoin is that simple. I understand that there are times when us stock market goes down and so does bitcoin as well and so that is why many people think it is normal for bitcoin to go down when stocks are down but that is not the connection at all.

The connection between them is that sometimes there are reasons why stock markets go down and that same reason could cause bitcoin to go down, in that instance bitcoin is not going down because stocks went down they are both going down for the same reason.

For this example we can use pandemic and trump, pandemic made stocks go down but it also made bitcoin go down, pandemic was global and it hurt everyone so it is obviously easy to understand why both got affected, but trump is american president, that has got nothing to do with bitcoin.

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Quote from: el kaka22 on October 06, 2020, 12:48:11 AM

I understand that trump is sick but why do people think that it should be affecting bitcoin as well? Not like Satoshi is sick? It is not like Vitalik is sick? It is trump and trump has nothing to do with bitcoin at all.

So, why do people think bitcoin should have gone down?

Do you think Trump has nothing to do with the US stock market?

That's the connection. The US stock market is correlated to risk assets. That includes Bitcoin. So if Trump got really sick and died, and that caused a selloff in equities, there would also be a selloff in BTC. It's no surprise both BTC and all stock futures markets dumped together for a couple hours when the news first broke.

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He is getting out, or maybe he is already out as well, so we can't really assume that it is a very long term thing. Obviously there is talks about Trump being ons streoids, those are not just for people who do body building to look better, they are actually medicine and considering it helps you heal better and faster it makes sense to give some to him, even if the long term affects are bad, he was given for just two days and that's it, so I guess it could be true.

We do not have any proof at all, but if that is right this means when the affects run down and he no longer has any streoids in his system, he might get even worse, temporary fixes will never be solution for permanent problems, which I assume he did in order to get back on the campaign but I think he will get worse.

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I think that the correlation between gold and bitcoin is only in the short term, gold has had a slight recovery, it is good, since Donald Trump fell ill with Covid-19 and his wife, they all believed that the price of the markets was going to end very low, in fact the problem of Bitmex regarding the accusation of fraud for some affected that they believed that the price was going to fall, apparently it may be that most people are beginning to understand the great potential that the market has of Bitcoin, we may now see a market rally to around $ 11k or higher.

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Quote from: el kaka22 on October 06, 2020, 12:48:11 AM

I am pretty sure the reason why we weren't really affected all that much was the fact that nothing that should be affecting bitcoin ever happened. I understand that trump is sick but why do people think that it should be affecting bitcoin as well? Not like Satoshi is sick? It is not like Vitalik is sick? It is trump and trump has nothing to do with bitcoin at all.

So, why do people think bitcoin should have gone down? I understand that american market may have gotten affected but that is because it is their own president that got sick so it makes sense that American market gets affected by American president, but bitcoin is not American, it is not European neither, it doesn't belong to any place, it belongs to everyone in the entire world so we all need to be affected.

What are you even saying? No one is here is arguing that "bitcoin should have gone down". It's just the fact that bitcoin actually did went down with the stock market; even if we like it or not, and even if it makes sense or not. The simple fact is that, it simply did.

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Quote from: mk4 on October 04, 2020, 09:51:54 PM

Quote from: Febo on October 04, 2020, 10:21:23 AM

This. Loss was big for stocks but just a regular day for Bitcoin.

Yes I agree with OPs concern that Bitcoin followed stocks and not Gold. But if we look from dothebeats perspective Bitcoin price stayed pretty unaffected. It was just a normal day. Gold went up, stocks down. Bitcoin stayed same.

It's not that bitcoin was necessarily unaffected, it's just that we bitcoiners are far more accustomed to such price volatility. But it doesn't take out the fact that the price moved in a certain manner.

In the first place, this topic isn't about the price drop(because who cares). It's mainly about the price correlation vs gold and the S&P500.

I can also address that directly it seems that bitcoin is not affected but if everything moves in a downward position of course there will be an impact and I agree that bitcoiner is more used to experiencing this compared to other products. In a situation like this, however, we can be sure that all will have an impact, no matter what, it's just how to reveal the impact that will differentiate.

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I am pretty sure the reason why we weren't really affected all that much was the fact that nothing that should be affecting bitcoin ever happened. I understand that trump is sick but why do people think that it should be affecting bitcoin as well? Not like Satoshi is sick? It is not like Vitalik is sick? It is trump and trump has nothing to do with bitcoin at all.

So, why do people think bitcoin should have gone down? I understand that american market may have gotten affected but that is because it is their own president that got sick so it makes sense that American market gets affected by American president, but bitcoin is not American, it is not European neither, it doesn't belong to any place, it belongs to everyone in the entire world so we all need to be affected.

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Quote from: Febo on October 04, 2020, 10:21:23 AM

This. Loss was big for stocks but just a regular day for Bitcoin.

Yes I agree with OPs concern that Bitcoin followed stocks and not Gold. But if we look from dothebeats perspective Bitcoin price stayed pretty unaffected. It was just a normal day. Gold went up, stocks down. Bitcoin stayed same.

It's not that bitcoin was necessarily unaffected, it's just that we bitcoiners are far more accustomed to such price volatility. But it doesn't take out the fact that the price moved in a certain manner.

In the first place, this topic isn't about the price drop(because who cares). It's mainly about the price correlation vs gold and the S&P500.

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Quote from: dothebeats on October 02, 2020, 07:19:40 AM

For the stock markets it might seem to be a huge event, but for bitcoin it is not.

This. Loss was big for stocks but just a regular day for Bitcoin.

Yes I agree with OPs concern that Bitcoin followed stocks and not Gold. But if we look from dothebeats perspective Bitcoin price stayed pretty unaffected. It was just a normal day. Gold went up, stocks down. Bitcoin stayed same.

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Just having a fixed supply doesn't guarantee being a hedge. Bitcoin is still an extremely risky and speculative investment, it doesn't even have some predictable fundamentals that you can use to calculate its value, and it's not enough that a small group of people believes that it's digital gold, because the rest of the population doesn't, and they won't be using it as a hedge, so it's natural for the speculators to dump it when there's uncertainty.

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Gold is only safer in that you know the price isn't going to really go up or down. Look at it's 1970s price and today's price... I guess with inflation figured in it actually lost value over half a century.

The only meaningful time I can say BTC is tied to the DJ/NASDAQ/S&P is when institutional investors start pulling major weight into it. At the current time Coinbase has more clout than the POTUS.

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Quote from: Zemomtum on October 03, 2020, 05:56:05 PM

Despite this new, it doesn't show in the price of Bitcoin that much in comparison with what we used to experience before. All of them have their purpose and can stand independently.

I agree but based on graph displayed by OP somehow bitcoin in a turnoil. It goes down but for a split days only. I am one of those who decided to put first on stablecoin majority of the asset cause anytime bitcoun could go down. Also include with that the recent news on bitmex issue where Arthur Hayes platform will be closed. Bitcoin holders panic and price suddenly go down. I think gold could be more safe than bitcoin. Crypto is really hard volatile so dont expect it to be much more safe than gold.

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Quote from: cryptoperkele on October 03, 2020, 05:18:33 PM

For now.

If gold would be under similar political pressure as bitcoin is, or if there would be any threat that governments could make illegal to hoard it (again), it wouldn't act as a safe heaven either. Gold isn't better, it's just currently on good terms with governments.

Exactly my thoughts. If gold as a publicly traded asset was also only 11 years old, I'd assume that it would also be as illiquid and probably as volatile as bitcoin, and it wouldn't also be an effective economic hedge. We won't get to that stage with bitcoin in just a decade; it's going to take time.

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Despite this new, it doesn't show in the price of Bitcoin that much in comparison with what we used to experience before. All of them have their purpose and can stand independently. Gold has proven to be a save heaven and BTC also has this quality despite all hurdles and condemnations, it still survives and might be the king in the future

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Quote from: davis196 on October 02, 2020, 06:47:11 AM

This chart is another proof that Bitcoin is not a safe heaven asset.Gold is still the one and only safe heaven asset,while BTC and the US stock market are following the same price patterns.
---cut---

For now.

If gold would be under similar political pressure as bitcoin is, or if there would be any threat that governments could make illegal to hoard it (again), it wouldn't act as a safe heaven either. Gold isn't better, it's just currently on good terms with governments.

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Quote from: pawanjain on October 02, 2020, 11:19:17 AM

May be these are just the panic investors who panic buy/sell their assets when they hear any news. We all know panic investors are present in both Stocks and the Crypto market.
On hearing this news may be these people sold their assets hoping that the market would crash. But to be honest, the market did take a dip but not much. It's kinda negligible.

I agree with you, this is mostly because of panic sellers. As you mentioned, they are everywhere in the Bitcoin market and in the stock market, and when they hear such news, they sell their assets, which leads to such a decline.
As for me, I think things are fine and after a short time everything will return to the same and better.

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Quote from: pawanjain on October 02, 2020, 11:19:17 AM

Also, since Bitcoin is mostly paired with USD the price is expected to fall down but if we compare it to another coin for example ether then there isn't much difference at all.

The below chart shows that the price hasn't changed much in the past 7 days when BTC is paired with ETH.

I mean, of course it doesn't, because most cryptocurrencies like ETH mostly follow BTC's price, not the other way around. There's a reason why almost every asset is paired with USD; and it's because it's one of the more sort of "accurate" assets to compare to, not like ETH which mostly follows bitcoin, and is a lot more illiquid compared to other assets.

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May be these are just the panic investors who panic buy/sell their assets when they hear any news. We all know panic investors are present in both Stocks and the Crypto market.
On hearing this news may be these people sold their assets hoping that the market would crash. But to be honest, the market did take a dip but not much. It's kinda negligible.

Also, since Bitcoin is mostly paired with USD the price is expected to fall down but if we compare it to another coin for example ether then there isn't much difference at all.
The below chart shows that the price hasn't changed much in the past 7 days when BTC is paired with ETH.

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From the bottom range, among Bitcoin, Gold, SP500, Bitcoin is the best one in terms of rallies. The chart shows that fact. I don't want to put too much detailed stats on the chart and mess it up.

If you care curious about my statement, you can use the Forecast and get the percentages of rally from bottom for each of these three (Bitcoin, Gold and SP500). You need to take into account the past rallies and today crashes. Even using today prices, bitcoin is still the best rallying asset.

https://www.tradingview.com/chart/?symbol=BITSTAMP%3ABTCUSD

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Therefore we conclude that nothing is to be considered as a safe-haven investment, everything will change, and might gold will experience like this before. Even oil prices also fell down yesterday the same goes for Bitcoin and the stock market as well.

But I have doubt that this is a short impact after the announcement has been released by Trump, the fact that there are still big investors afraid of Bitcoin as an investment. Even Bitcoin has appeared to lead the losses dropping among other investments but I think it will recover quickly soon as we know how to fluctuate Bitcoin price.

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Quote from: Fundamentals Of on October 02, 2020, 09:09:51 AM

Can it be said that the money that came out from stocks and Bitcoin entered gold?

Totally possible, but it's going to be hard to make such conclusions in cases like this, because of a few factors:

1. Probably only a minority of bitcoiners are actually interested in buying gold.
2. Not all stock market investors are interested in economic hedges, as I think most are interested in taking advantage of the uncertainty by buying value stocks.
3. It could probably just be goldbugs being more bullish on gold.

But then again, we can't really know this unless we grab all the data from multiple bitcoin exchanges, stock brokerage platforms, and online precious metals dealers.

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Looking at the chart it seems the rally of gold happened almost immediately after the prices of stocks and Bitcoin fell. Can it be said that the money that came out from stocks and Bitcoin entered gold?

By the looks of it there seems to be an inverse relationship between stocks and Bitcoin on the one hand and gold on the other. So if you are closely monitoring the stock market and you want to hedge your funds then, based on the chart, you should be going into gold rather than Bitcoin.

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Quote from: davis196 on October 02, 2020, 06:47:11 AM

This chart is another proof that Bitcoin is not a safe heaven asset.Gold is still the one and only safe heaven asset,while BTC and the US stock market are following the same price patterns.

It sure isn't right now(price wise), but the long-shot bet is that it will hopefully be a good hedge against economic uncertainty in the future. Regardless the price movement though, I'd still rather hold bitcoin than gold. Bitcoin's easy self-custody characteristics is a really important factor when talking about economic hedges in my opinion.

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Quote from: davis196 on October 02, 2020, 06:47:11 AM

This chart is another proof that Bitcoin is not a safe heaven asset.Gold is still the one and only safe heaven asset,while BTC and the US stock market are following the same price patterns.
I guess that the COVID-19 announcement made by Trump scared a small part of the traders,so they sold stocks and bought gold,but this is only a short term impact.The US stock market is going to be crazy in the next few months.

I'd rather think that the Bitcoin market is still just way too uncertain right now due to immaturity. If you take a look at it, while it surely did follow a hard decline similar to stocks, from 00:00 to 06:00 it's almost like it didn't know what to do.

If we think about it, maybe Bitcoin isn't neither a safe haven asset or a stock-related one. Maybe it's something different and this is why it also acts differently. We still try to attach Bitcoin to different definitions, terms and categories yet we never think it might actually fit into an unique definition of its kind.

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When I first heard Trump and his wife had tested positive for coronavirus I knew precisely what I should do with my bitcoin - just hodl it further despite market movements. I decided for myself that bitcoin is a store of value, just like that. This is how SoV part of money is born. The more people refuse to sell bitcoin, the less volatile it gets, the less it fluctuates on every single news. I don't understand those people who claim that bitcoin is neither a safe haven nor is it a store of value. Your opinion is simply based on the wrong assumptions, you trust others emotions (market small movements) more than your perception and your experience.

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For the stock markets it might seem to be a huge event, but for bitcoin it is not. The change is single digit percentage for bitcoin that has been negligible for years now, and we know that wilder and more erratic declines and spikes have been recorded than this. For sure most bitcoiners don’t really care about the drama of the events on the US, and only those who are directly affected by this which obviously are the Americans. But yeah, it is too small of a change to be worried about IMO.

And for the presidential aide whom the Trumps came in close contact with, you did the USA a whole favor for Trump to acknowledge the disease finally.

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This chart is another proof that Bitcoin is not a safe heaven asset.Gold is still the one and only safe heaven asset,while BTC and the US stock market are following the same price patterns.
I guess that the COVID-19 announcement made by Trump scared a small part of the traders,so they sold stocks and bought gold,but this is only a short term impact.The US stock market is going to be crazy in the next few months.

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As somewhat expected, since bitcoin and the US stock market in general have been heavily correlated since the past months, they've went down together; whereas gold had a small spike up in price. Unfortunately we're yet to see bitcoin do it's job as a sort of "economic hedge"; hopefully some time in the future.

Completely up to you how you're going to use this information. I just find it interesting.

EDIT(October 7): After Trump has announced that stimulus talks will be delayed until after the upcoming election, the markets dropped a bit. Again, market correlation continues.

■ Gold
■ SP500 futures(US stock market)
■ Bitcoin

Chart: https://uk.tradingview.com/chart/?symbol=BITSTAMP%3ABTCUSD

Previous chart(October 02, 2020):

Chart: https://uk.tradingview.com/chart/?symbol=BITSTAMP%3ABTCUSD

Topic: [UPDATED] Bitcoin vs Gold vs The US Stock Market(US500) (Read 578 times)